Two Home Owners & Maximising on Private Residence Relief
As an owner of two homes, Private Residence Relief or PRR allows you to choose which property receives a Capital Gains Tax Private Residence Relief (useful when you sell a home), but what are the rules?
Recently there have been changes to PRR, affecting spouses and civil partners. When choosing which property you want to receive PRR, you have 2 years from the date you had more than one qualifying property to notify HMRC of your choice.
If you don’t, HMRC decides which property gets PRR for you and they usually apply PRR to the property occupied by you the most. This won’t always be the best outcome for you.
Property values climb and slide over time as a result of home improvements, gentrification and other reasons – which means you may need to change which property to apply the relief to.
The good news is once a nomination is made, it can be altered as many times as you need to – and for up to two years retrospectively. That means when property values change where your choice is less efficient PRR wise, you can switch property by notifying HMRC.
It’s always better to make a choice and not leave it within two years of owning two or more homes – once your nomination is made you can vary it when you need to.
For help with calculations on Private Residence Relief please contact our tax team on let’s talk. With offices across South West Wales in Carmarthen, Cross Hands near Swansea, Tenby, Haverfordwest and Lampeter, and over 85 years’ experience – you are in safe hands.